1991 (8) TMI 23 - HC - Income Tax

Summary

The High Court of Karnataka ruled that the deduction of municipal tax from previous years can be allowed if the demand was raised during the current accounting year. The court cited the proviso to section 23(1) of the Income-tax Act, stating that the tax liability arises when the demand notice is issued. The decision was based on precedents from the Madras High Court and was upheld by the Appellate Tribunal. The court answered the question in favor of the assessee, stating that the tax deduction is permissible when the tax is demanded and paid by the property owner.